The Self Employed’s Guide to Choosing the Right Business Bank

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A good business bank is like an old friend: supportive and reliable. Ideally, your bank understands your mission and your passion, and they want to help you realize your full potential. A loan is nothing but a promissory note, right? Well, the promise cuts both ways.

A good business bank should be a partner in your success – it pledges support, not only cash or credit, but also services to help you navigate your debt. And in return you promise to make every dollar count. The bank profits with you, and if you are unable to pay your debt, then the bank is out of luck.

You two are in this together.

Understand Your Needs and Find a Bank that Fits Your Business

When you are looking for a bank, begin by asking what your business needs. All banks are not created equal, and saddling yourself with the wrong bank can be a serious financial burden. Knowing precisely what you need will help you narrow down your search: Are you looking for specialized services? Will you be applying for a loan? How about a credit card?

Don’t be afraid to ask a banker to give you exactly what you want

If you are a new to self-employment then your needs are probably fairly simple, but what about in 10 years down the line? Inevitably, choosing the right business bank means striking a balance between what you need right now (low rates, minimal services, possibly a business credit card) and what you will need to sustain growth in the future (loans and lines of credit, asset management, and access to a financial adviser).

A Closer Look

Once you know what you are looking for, start comparing banks in your area. Of course, you don’t need to limit your search to “local” banks, but many small business owners benefit from having a personal, face-to-face relationship with a business banker.

At the other end of the spectrum, if you prefer a “hands-off” approach, then you might consider opening an account with an online bank. Online banks are often able to provide lower rates—as you’d expect, their overhead is extremely low—as well as comprehensive virtual banking, a service that many community banks don’t provide. But you also get what you pay for – minimal personal service, and that is probably not what you need.

As you narrow down your choices, pay close attention to the fees and rates. Some banks charge a fee every time your balance falls below a predetermined minimum, others offer bare-bones service in exchange for lower rates. Even if you’re planning to stick with a bank you’ve known for years, be sure to ask a lot of questions: The fee structure for a business checking account may be significantly different—and significantly higher—than for a non-commercial account.

Does Size Matter?

Big banks have a reputation for being more bureaucratic and less friendly, but the truth is, these days, that is often not the case. Banks want your business, especially if your business is a business. Big banks especially will work hard to earn and keep that business, and you will likely get far more personal service than you might otherwise expect. In addition, you should expect competitive rates or greater access to capital from a bigger bank. As your business grows, your priorities may change, and a bigger bank can grow with you. Try to take the long view.

Stand Up For Yourself

Banks are more flexible than you think, and even a big bank stands to make a significant amount of money from a small business. So don’t be afraid to ask a banker to give you exactly what you want, within reason.

Remember that you are building a relationship, and your bank can be a valuable business partner. Treat a bank as you would any other associate: be polite, be firm, and make sure that your arrangement is mutually beneficial.

Personal recommendation: Steve Strauss does a lot of work with  Bank of America. If you are looking for a great business bank, let us suggest that you check them out. Here at TheSelfEmployed, we know that B of A is committed to small business, indeed they have recently hired almost a thousand small business bankers and are looking to make good loans.